Useful Stats: VC investments double over decade; deal growth slows

Over the five-year period from 2012 to 2017, as total venture capital investments more than doubled, growing from $41.2 billion to $84.0 billion, the number of deals increased by just 2.7 percent according to new data from the NVCA-Pitchbook Venture Capital Monitor. In 2017, more than half of all venture capital deals and three-quarters of all venture capital dollars went to companies in California, New York, and Massachusetts in 2017. However, the share of deals going to these three states decreased slightly from 2007 to 2017 (from 56.1 to 52.4 percent), while the share of dollars increased from 62.3 percent to 75.7 percent.

Based on the NVCA-Pitchbook Venture Capital Monitor data, SSTI has prepared information on VC investment by state and changes over time. That data, along with state-by-state totals for 2007-2017 are available in Excel format below.

The $84.0 billion in total VC investments in 2017 is the largest amount since Pitchbook began tracking the data in 2006. However, the number of deals — despite climbing to 8,056 from the 7,845 deals counted in 2012 — continues to lag behind 2013 and 2014, when there were approximately 10,400 deals.

California had, by far, the most venture capital activity in 2017 (2,750 deals totaling $42.8 billion), followed by New York (922 deals totaling $12.1 billion) and Massachusetts (551 deals totaling $8.8 billion dollars). Six other states recorded more than $1.0 billion in VC investment in 2017: Texas, Washington, Colorado, Pennsylvania, Florida, and Illinois.  West Virginia, Mississippi, Alaska, and North and South Dakota were the only states to have fewer than 10 VC deals in 2017.

The rest has yet to rise

Across the nation, there is increased interest in “the rise of the rest,” or the idea that venture capital activity is beginning to diffuse away from a select few markets. The most recent data shows mixed evidence to support this theory.

California, Massachusetts and New York represent the majority of venture capital activity not just in 2017, but over the past decade as well. The chart below shows the share of total venture capital activity going to those three states from 2007 to 2017. While the share of deals going to those three states has slowly decreased, the share of dollars has increased considerably. Texas, Washington and Colorado are the states included in “the rest” that contributed the most to its overall rise in deal flow.

Comparing 2017 VC activity to 10-year averages

To help address the spikiness of annual VC data, SSTI calculated averages for dollars and deals from 2006 to 2016, and then compared those averages to 2017 dollars and deals. Deals in 2017 were lower than 2006-2016 averages in six states: New Jersey, Missouri, New Hampshire, Hawaii, Mississippi and West Virginia. On the other hand, 12 states had less VC investment in 2017 than they did, on average, over the 10-year period from 2006 to 2016.

As the chart above shows, the states with the most VC deals generally saw the greatest increase in deals when comparing 2017 numbers to 2006-2016 averages. Besides California, New York, and Massachusetts, the states where VC deals in 2017 were the greatest compared to 2006-2016 averages were Colorado, Washington, and Florida. Wyoming, Idaho, and Iowa saw the greatest percentage-level increase from 2006-2016 average deals to 2017 deals.

Notes

Last week, SSTI highlighted research from PricewaterhouseCoopers (PWC) and CB Insights' 2017 MoneyTree Report. Due to methodological differences between the two reports, topline numbers differ but the overall trends are largely the same.

To explore this information further, additional data on state-by-state VC activity can be downloaded below. 

Useful Stats 012218.xlsx